FY10 may be more difficult year: RBI

The RBI governor, Duvvuri Subbarao, said country`s growth projections for the current financial year ending in March 2009 may be revised downwards. The Reserve Bank of India (RBI) governor, Duvvuri Subbarao, said the country's growth projections for the current financial year ending in March 2009 may be revised downwards. Speaking to the media after meeting the chief minister of West Bengal, he said FY10 may be a more difficult year.

Inflation drops to lowest in seven months

Inflation dropped to 8% for week ended Nov 29 against 8.4% in the previous week. India's inflation, based on the wholesale price index (WPI), further cooled off and was inline with the expectations in the week through November 29. Inflation declined due to a drop in food products and primary articles, the Government announced on Thursday.

The index for fuel, power, lubricants, lights and manufactured products remained unchanged. The annual point-to-point inflation was 8.00% in the week ended Nov. 29 versus 8.4% in the previous week, the Commerce & Industry Ministry said. Inflation had touched a 16-year peak of 12.91% in August.

Inflation was expected to come in at 7.97% - 8%. Meanwhile, the Government revised the inflation rate for the week ended Oct. 4 to 11.49% from a preliminary estimate of 11.44%

Weekly Stock Ideas - Dec 14 2008

Buy L&T

Buy Punj Lloyd

Buy NTPC

Buy IVRCL Infra

Buy Ansal Infra

Ten commandments on Banks

So diversify your investments across banks and don`t park all your cash in one place.

1. Thou shalt not use one bank account
Bank deposits are not 100% safe. Deposits of only up to Rs 1 lakh are insured by the government. If your bank fails, this is the maximum amount you will be entitled to. In the past, when there has been a rush of investors to withdraw deposits, some banks have been forced to stagger payment or limit withdrawals. So diversify your investments across banks and don't park all your cash in one place.

2. Thou shalt not live on credit
Even in normal circumstances, cash is king. In times of a meltdown, as is the case now, this is doubly true. As defaults rise, stock brokers ask the clients for upfront payments before placing a buy order for securities. In such situations, only cash will allow you to tap the opportunities that a volatile stock market throws up.

3. Thou shalt not rely on debt
While equity markets are going through one of the roughest phases in recent years, fixed deposits and other debt options are offering very attractive returns. But don't be tempted to go on a debt binge just because the interest being offered is very high. Though debt gives some stability to your portfolio, keep in mind that every investment carries an element of risk, including the so-called 'safe' investments. Some non-banking finance companies, in which debt funds and fixed maturity plans had invested, are defaulting in repayment commitments.

4. Thou shalt not be passive
You need to update your portfolio regularly and a bust offers an opportunity to do this. Keep an eye on market movements to weed out dead investments or take advantage of new avenues. For instance, did you know that some banks are allowing free upgrades to higher interest rate deposits without having to pay a penalty?

5. Thou shalt think globally
Global factors affect you; foreign names matter. When Lehman Brothers went bust, Unitech's shares were hammered. So from now on, you need to look at how foreign companies, hedge funds, PE funds or FIIs are performing, since they invest in the companies that you invest in.

6. Thou shalt have a fixed time frame
If you don't have a specific time frame for your investments or decide to ignore the one you had initially set, you could end up losing. Those who invested in real estate found this out to their disadvantage; they went into a panic mode and tried to offload their property even when prices were abysmal and there were few buyers.

7. Thou shalt ignore listing day gains
No longer can you rely on IPOs for assured profits. There was a time when investors could book spectacular profits of 100-150% and get out of an IPO the day it was listed. This is not true anymore.

8. Thou shalt not ignore equities
Don't give up investing in the stock market just because the Sensex has fallen to below 10,000. Even if the uncertainty has forced you to scale down your investments, don't stop putting in the money altogether. Regular investments help you bring down average costs.

9. Thou shalt not ignore bargains
A slowdown is a great time for the consumer. When everyone starts cutting down on investments and sales targets are consistently missed, it opens up the market for good deals. Houses, cars, gadgets, consumer durables... you're likely to get great deals on all these if you keep your eyes and ears open.

10. Thou shalt not be afraid to quit
While recent job cuts in the high-profile aviation and financial services sectors might have scared you, not every industry is faced with the same uncertainty. All you need to do before you decide to change jobs is homework. Find out which sectors are suited to your skillsets and experience. For example, the professional requirements of aviation and hospitality sectors easily overlap.

via Indiainfoline

Weekly Newsletter - Dec 14 2008

Last weekend saw some stimulation for the economy. The measures by the government and the RBI resulted in the major indices gaining around 8% each for the week. Much needed support from global markets pepped up sentiment further.

The coming week will again dance to the global market music. On the domestic front there will be leaks of advance tax numbers. More focus would be on a Fed meet likely next week and industrial production data in the US which is expected to be negative.

Markets have the tendency to surprise and bulls will hope for some positive surprises like this week. Remain cautious. Avoid putting much fresh money as yet .

India’s Oct IIP drops to negative 0.4% from year ago

India’s industrial production fell for the first time in 15 years. Output at factories, utilities and mines dropped 0.4% in October from a year earlier after a revised 5.45% gain in September, according to the Central Statistical Organization. Market was expecting an increase of 2.1%. IIP last declined in output in April 1993.

Waning exports and weaker domestic demand are forcing companies such as Mahindra & Mahindra Ltd. and Ashok Leyland Ltd. to cut production, weakening growth in an economy expected by the central bank to expand at the slowest pace in more than four years.

India’s exports fell for the first time in seven years in October.

Earlier, on Dec. 6, RBI lowered its repurchase rate to 6.5% from 7.5%, the third cut since October. The next day the government announced a US$4bn stimulus package.

Manufacturing, which accounts for about 80% of total output, dropped 1.2% in October. Electricity output rose 4.4% and consumer-goods production fell 2.3%.

Passenger-car sales declined 19% last month, the most in more than five years, as tighter lending by banks and a slowing economy hurt demand. Sales fell to 83,059 from 103,031 a year earlier, according to the Society of Indian Automobile Manufacturers.

Concern over companies cutting production and losing profits has seen Sensex decline 52% this year. FIIs have sold US$13bn of domestic equities this year, compared with US$17.2bn of share purchases in 2007.

Weaker production and exports may hurt India’s economic expansion. India's economy may grow 7.5% in the year to March 31 from 9% or more annually in the previous three years, according to the RBI data.

Rate cuts and stimulus to pep up economy

Last weekend was an eventful one. The Government has been concerned about the impact of the global financial crisis on the Indian economy and a number of steps have been taken to deal with this problem. The first priority was to re-assure the people of the stability of the financial system in general and of the safety of bank deposits in particular. To this end, steps were taken to infuse liquidity into the banking system and also to address problems being faced by various non-bank financing companies. These steps have ensured that the financial system is functioning effectively without suffering the kind of loss of confidence experienced in the industrialised world.

Having assured stability of the system, the Government has focused its attention on countering the impact of the global recession on India's economic growth. On the monetary side, the RBI has sought to pump sufficient liquidity into the banking system to enable bank credit to meet the expanded requirements of the economy keeping in mind the contraction in credit from non-bank sources. Banks have been provided adequate liquidity through a series of reductions in the CRR and additional flexibility in meeting the SLR requirement. Interest rate reductions have also been signalled by reductions in the repo and reverse repo rates, the most recent of which was announced on Saturday when both the repo rate and the reverse repo rate were cut by 100 basis points. Access to external commercial borrowings has also been liberalised so that borrowers capable of accessing funds from abroad are allowed to do so. The banks are being encouraged to counter what might otherwise become self-fulfilling negative expectations by enhanced lending to support economic activity.

These measures in the area of money and credit are being supplemented by fiscal measures designed to stimulate the economy. In recognition of the need for a fiscal stimulus, the Government had consciously allowed the fiscal deficit to expand beyond the originally targeted level because of the loan waivers, issue of oil and fertilizer bonds and higher levels of food subsidy.

Post Session Commentary - Dec 12 2008

The domestic market ended the day with marginal gains after recovering from initial losses on upturn in US index futures from early fall. Resumption of buying by foreign funds also aided recovery on the domestic bourses. Benchmark indices reported a smart bounce back from earlier fall which was by the failure of the proposal to bail out the US auto industry in a procedural vote in the Senate late, 11 December 2008. During the final trading market ignored weak opening of European markets and the grim IIP data as expecting more rate cuts to aid the economic slowdown.

The Indian market opened with a negative gap tracking weak cues from Asian markets after collapse of the US auto bailout. Further, market continued to trade in red on huge sell off ahead of October IIP number. The market was not showing any sign of recovery as much eyed IIP number for the month of October fell for the first time in many years by 0.4% in October, softened by manufacturing sector. However, during final trading, benchmark indices took a sharp rebound from its losses to move into the positive zone on recovery in US index futures. Expectation of another cut in rates by RBI also lifted sentiments. From the sectoral front Consumer Durables, Oil & Gas, Reality, Capital Goods, Metal and Bank stocks were in limelight as witnessed most of the buying from these baskets. Midcap and Smallcap stocks also supported the market. However IT, Teck, FMCG, Pharma and PSU stocks remained out of favor.

Among the Sensex pack 17 stocks ended in green territory and 13 in red. The market breadth was positive as 1547 stocks closed in green while 851 stocks closed in red and 81 stocks remained unchanged.

The BSE Sensex closed higher by 44.61 points at 9,690.07 and NSE Nifty ended slightly up by 1.20 points at 2,921.35. The BSE Mid Caps and Small Caps ended with gains of 47.40 points and 87.37 points at 3,050.48 and 3,530.96 respectively. The BSE Sensex touched intraday high of 9,745.41 and intraday low of 9,281.89.

Gainers from the BSE Sensex pack are DLF Ltd (7.73%), Reliance Infra (7.25%), Reliance Communication Ltd (4.18%), Reliance (3.76%), Hindalco (3.12%), Tata Power (2.71%), M&M Ltd (2.32%), JP Associates (1.71%), HDFC (1.79%), SBI (1.38%), ICICI Bank (1.28%) and ITC Ltd (0.91%).

Losers from the BSE Sensex pack are TCS Ltd (5.00%), Wipro Ltd (4.52%), Tata Motors (4.02%), ONGC Ltd (2.78%), Bharti Airtel (2.69%), Infosys Tech (2.52%), Satyam computer (1.60%), NTPC Ltd (1.23%), BHEL (1.06%) and Grasim Industries (0.86%).

The Index of Industrial Production number for October stands at a negative 0.4% as compared to 4.8% of earlier month. It was 12.22% during the corresponding period of previous year. A negative IIP number has happened for the second time in India''s history and was last seen 10 years back. Manufacturing production, which accounts for 80% of the index fell 1.2% in October 2008 from 13.8% a year earlier.

The BSE Reality index ended up by (3.94%) or 80.60 points at 2,128.18. Major gainers are Anant Raj (9.94%), DLF Ltd (7.73%), Ansal Infra (4.12%), Penland Ltd (2.80%), Mahindra Life (2.49%) and Housing Dev (2.11%).

The BSE Consumer Durables index advanced by (2.93%) or 49.60 points to close at 1,743.05. Main gainers are Titan Ind (4.87%), Gitanjali GE (4.12%), Rajesh Export (2.95%), Blue Star L (0.53%) and Videocon Ind (0.30%).

The BSE Oil & Gas index surged (2.34%) or 140.36 points to close at 6,145.35 as BPCL (5.72%), HPCL (5.51%), Essar Oil Ltd (4.69%), Reliance (3.76%), Cairn India (2.95%) and IOC (2.61%) ended in green.

The BSE Bank index ended higher by (1.20%) or 59.95 points at 5,063.25 as IDBI Bank (4.27%), Indian Overseas Bank (3.70%), Indus Ind Bank (3.20%), Punjab National Bank (2.69%), Bank oIndia (2.67%) and Axis Bank (2.49%) ended in positive territory.

The BSE IT index ended down (2.88%) or 67.87 points at 2,291.33. Losers are HCL Tech (7.27%), TCS Ltd (5.00%), Wipro Ltd (4.52%), Financ Tech (3.51%), NIIT Ltd (3.12%) and Infosys Tech (2.52%).

The BSE Teck index ended lower by (1.70%) or 34.48 points at 1,990.45 as TCS Ltd (5.00%), Wipro Ltd (4.52%), Financ Tech (3.51%), DTL Ltd (3.47%), NIIT Ltd (3.12%) and Bharti Airtel (2.69%) ended in red.

Markets put a brave front

The market wiped out a loss of over 363 points incurred during intra-day trades after a strong bout of buying led by DLF, Reliance Infrastructure and Reliance Industries in afternoon changed the sentiment to bullish. The 50-stock benchmark of the BSE, Sensex, was 274 points down at 9,371 at the opening bell taking cues from weak Asian indices, and crashed to the day's low of 9,282 on relentless selling pressure amid high volatility. The market showed strong optimism thereafter and the Sensex witnessed a sharp turn-around as gains in heavyweight, reality, oil and consumer durable stocks propelled it to an intra-day high of 9,746. The market turned extremely choppy and gyrated between the positive and negative territories for the later part of the trading session and the Sensex closed with a gain of 45 points at 9,690. Nifty ended a point up at 2,921.

The market breadth was marginally positive. Of the 2,479 stocks on the BSE, 1,547 stocks advanced, 851 stocks declined
and 81 stocks ended unchanged. Most of the sectoral indices ended in the green. BSE Realty advanced 3.94% followed by BSE CD (up 2.93%) and BSE Oil & gas (up 2.34%). However, BSE IT slipped 2.88%, BSE Teck (down 1.70%) and BSE HC (down 0.32%).

Among the Sensex stocks, DLF was the leading gainer and its stock price soared 7.73% at Rs276.50, Reliance Infrastructure advanced 7.25% at Rs648.30, Reliance Communications jumped 4.18% at Rs249.20, Reliance Industries gained 3.76% at Rs1,306.20, Hindalco Industries moved up by 3.12% at Rs52.90, Tata Power added 2.71% at Rs750.80 and Mahindra & Mahindra surged 2.32% at Rs292.95. Among the laggards, Tata Consultancy Services slipped 5% at Rs482.25, Wipro shed 4.52% at Rs238.70, Tata Motors declined by 4.02% at Rs154.10, ONGC fell by 2.72% at Rs646.45 and Bharti Airtel lost 2.69% at Rs722.30.

Over 2.37 crore shares of Reliance Natural Resources Ltd (RNRL) changed hands on the BSE followed by IFCI (1.87 crore shares), Suzlon Energy (1.75 crore shares), Unitech (1.49 crore shares), Reliance Petroleum Ltd (1.41 crore shares) and GVK Power & Infrastructure (1.22 crore shares).

Reliance Industries registered a turnover of Rs499 crore on the BSE followed by RNRL (Rs300 crore), Reliance Capital (Rs299 crore), DLF (Rs207 crore) and Reliance Infrastructure (Rs185 crore).

Foreign fund flows help market regain vigour

A strong booster dose by the government, in the form of a fiscal stimulus package for the economy and rate cut by the central bank, aided a recovery on the bourses last week. Besides the stimulus, after trading hours on Friday, 5 December 2008, the government had lowered petrol prices by Rs 5 per litre and diesel by Rs 2 per litre - the first reduction since February 2007 - following over $100 a barrel slump in world oil prices from record highs in mid-July 2008. The fuel price cut will bring down inflation further and will provide further room for the Reserve Bank of India (RBI) to cut rates.

Inflation based on the wholesale price index rose 8% in the year through 29 November 2008, lower than previous week's annual rise of 8.4%, data released by the government on 11 December 2008, showed. Inflation had surged into double digits in early June this year after an increase in state-set retail fuel prices, and peaked at 12.91% on, 2 August 2008, the highest reading since annual numbers in the current data series became available in April 1995.

The BSE 30-share Sensex rose 724.87 points or 8.09% to 9,690.07 in the week ended Friday, 12 December 2008. The S&P CNX Nifty rose 206.95 points or 7.62% to 2921.35 in the week.

The BSE Mid-Cap gained 157.53 points or 5.45% to 3,050.48 and the BSE Small-Cap index rose 207.42 points or 6.24% to 3,530.96 in the week. Both these indices underperformed the Sensex.

The market sentiment improved following resumption of buying by foreign funds this month. Foreign instittional investors bought shares worth Rs 2048.70 crore in December till 11 December 2008. They are net sellers of Rs 52688.50 crore in calendar year 2008 so far.

Doubts as to how much stimulus the already stretched government budget will be able to finance, pulled the market sharply off the higher level in late trade on Monday, 8 December 2008. The BSE 30-share Sensex rose up 197.42 points or 2.2% to 9,162.62. The S&P CNX Nifty gained 69.60 points or 2.56% at 2784. Market remained closed on Tuesday, 9 December 2008 on account of Bakri-Id.

Frenzied buying in index pivotals on speculation US lawmakers will approve a $15 billion bailout of American auto companies, boosted the domestic bourses Wednesday, 10 December 2008. The BSE 30-share Sensex surged 492.28 points or 5.37% to 9,654.90. The S&P CNX Nifty advanced 144.25 points or 5.18% to 2928.25.

Hopes that the central bank may cut rates further and reports that the government is likely to come out with a second fiscal stimulus for the economy helped the key benchmark indices bounce back in the last one hour of trade on Thursday, 11 December 2008. The BSE 30-share Sensex slipped 9.44 points or 0.10% to 9,645.46. The S&P CNX Nifty fell 8.10 points at 2,920.15.

Shrugging off a dismal industrial production data and failure of the plan to rescue US auto makers, the market ended in the green on Friday, 12 December 2008. The BSE 30-share Sensex rose 44.61 points, or 0.46%, to 9,690.07. The S&P CNX Nifty rose 1.20 points, or 0.04%, to 2921.35.

India's industrial output fell 0.4% in October 2008 from a year earlier, sharply below the previous month's upwardly revised 5.5%, data showed on Friday, 12 December 2008. Industrial production had expanded 12.2% in October 2007.

Real estate shares rallied after the Reserve Bank of India (RBI) on Saturday, 6 December 2008, announced several measures, including a refinance facility for the National Housing Bank and priority sector status for housing loans up to Rs 20 lakh. India's top real estate developer by market capitalisation DLF galloped 36.11%, Unitech (up 11.36%), and Housing Development & Infrastructure (HDIL) (up 23.65%), rose.

Banking shares vaulted on hopes rate cut will boost lending growth. India's largest private sector bank by net profit ICICI Bank rose 14.79%. India's second largest private sector bank by net profit HDFC Bank rose 3.52% and India's largest state-run bank by net profit State Bank of India rose 6.96%.

The RBI, on 6 December 2008, announced a 100-basis point cut in the repo rate and the reverse repo rate each. Repo rate is the rate at which RBI lends to commercial banks and reverse repo rate is the rate at which RBI accepts deposits from banks. The RBI also announced steps to improve liquidity and shore up economic activity.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) rose 16.77% in the week. Reliance Industries is reported to have signed an agreement for a $400 million financing facility from JPMorgan. The 11-year facility will help Reliance buy equipments from 17 suppliers in the United States, and is guaranteed by the Export-Import Bank of the United States. Reliance has reportedly raised over $2.5 billion over the last four months to support its capital expenditure program.

India's largest oil exploration firm by market capitalisation Oil and Natural Gas Corporation fell 1.28% on reports Imperial Energy, which is in the process of being taken over by ONGC, has not renewed its licence to prospect oil in Kazakhstan. This revelation comes at a time when ONGC is critisized for overpaying for the acquisition.

The non-renewal of licence in Kazakhstan means that Imperial has lesser assets now than what it had five months ago when ONGC had agreed to buy it for $2.6 billion. Imperial Energy, a British oil company operating in West Siberia and Kazakhstan, held 75% stake in Kazakhstan's Sevkazgra which has a licence to prospect and produce oil at the North Torgai block in north-central Kazakhstan.

India's second largest cellular services provider by sales Reliance Communications jumped 26.34% on reports that strategic investors, including telecom groups from the US and Europe, are in talks with the company to acquire around 20-26% stake

Software exporters fell this week as outlook for the US market, their biggest market, still remains grim. India's second largest IT exporter by sales Infosys Technologies declined 2.49%. India's largest software exporter by sales TCS declined 7.56%, and India's fourth largest software exporter by sales Satyam Computer fell 1.63%. However, India's third largest software exporter by sales Wipro rose 5.08% in the week.

Sensex, Nifty outperform global peers

Shrugging off a dismal industrial production data and failure of the plan to rescue US auto makers, key benchmark indices edged higher as index heavyweight Reliance Industries (RIL) staged a sharp comeback from early slump. Volatility was high. The BSE 30-share Sensex rose 44.61 points and 0.46%, recovering 408.18 points from the day' low. The domestic boures outperformed their global peers.

The BSE Sensex had fallen 339.89 points or 3.65% to 9,305.47 in early afternoon trade following a dismal industrial production data and on failure of the plan to rescue US auto makers.

Buying by foreign funds this month has lifted sentiments. Foreign funds have bought shares worth Rs 2,048.70 crore, till 11 December 2008. They are net sellers of Rs 52,688.50 crore in calendar 2008, so far.

Foreign institutional investors (FIIs) were net sellers worth Rs 16.52 crore while mutual funds bought shares worth Rs 325.81 crore today, 12 December 2008, according to provisional data on NSE.

A likely second fiscal stimulus package by the government also aided the rebound. Commerce Minister Kamal Nath yesterday, 11 December 2008 said the government is working on a second package aimed at generating employment and ensuring that the credit needs of the companies are met.

The package assumes significance as the World Bank in its report on 10 December 2008 expressed fears of a deeper and prolonged slowdown which may pull down the global economic growth to less than 1% in 2009. Also many of the developed nations like the US, Japan and some countries in the Eurozone are already in recession and India is witnessing the ripple effects of the global slowdown.

The first stimulus package unveiled by the government on Sunday, 7 December 2008, involved Rs 20,000 crore in additional government expenditure, an across-the-board 4% excise duty cut amounting to Rs 8,700 crore and benefits worth Rs 2,000 crore for exporters.

The market was volatile right from the onset of the trading session. The Sensex swung 463.62 points between the day's high and low. The market had cut losses in early trade after an initial sell-off triggered by the collapse of the US auto bailout. The intraday recovery was short-lived as the market weakened again in morning trade. The market cut losses later. It weakened in early afternoon trade again following dismal industrial production data for October 2008, before recovering from lower level helped by rebound in index heavyweight RIL. The market moved into positive zone in mid-afternoon trade as RIL extended gains.

India's industrial production declined 0.4% in October 2008, as compared to an upwardly revised 5.5% growth in September 2008, data released by the government today, 12 December 2008, showed. Manufacturing production fell 1.2% in October 2008 from a year earlier.

The US Senate failed on Thursday night to reach a last-ditch compromise to bail out automakers, effectively killing any chance of congressional action this year. Trading in US index futures indicated the Dow could fall 320 points at the opening bell.

Asian and European stocks slumped as the collapse of the US Senate's $14 billion auto bailout plan threatened to deepen the global economic slump. In Asian, key indices in China, Hong Kong, Japan, Singapore, South Korea, and Taiwan were down by between 3% and 5.48%. In Europe, key benchmark indices in Germany, France and UK were down by between 4.18% and 5.48%, in Europe.

The White House said it would evaluate its options in light of the collapse of the auto sector bailout legislation. The Bush administration has resisted Democrats' past demands to use some money from the $700 billion bailout package approved in October 2008 to help struggling financial institutions to help the automakers.

The US auto industry is reeling from depressed sales, made worse by the credit crunch and the recession. General Motors (GM) and Chrysler have warned of near-term collapse if they did not receive a government bailout. A failure of any one of the three US automakers - GM, Ford or Chrysler, would threaten countless jobs and reverberate not only through the global supply chain but in financial markets as well

The BSE 30-share Sensex rose 44.61 points and 0.46% to 9,690.07. At the day's high of 9,745.51, the Sensex rose 100.05 points in late trade. At the day's low of 9,281.89, the Sensex lost 363.57 points in early trade.

The S&P CNX Nifty gained 1.2 points or 0.04% at 2,921.35. Nifty December 2008 futures were at 2910.25, at a discount of 11.5 points as compared to the spot closing.

The barometer index BSE Sensex is down 10596.92 points or 52.23% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 11516.70 points or 54.30% below its all-time high of 21,206.77 struck on 10 January 2008.

The total turnover on the BSE amounted to Rs 4471 crore as compared to Rs 4,638.42 crore on Thursday, 11 December 2008. Turnover on NSE's futures & options (F&O) segment increased to Rs 41,078.17 crore from Rs 38,606.17 crore on Thursday, 11 December 2008.

The market breadth, indicating the overall health of the market, was strong in contrast to a weak breadth earlier in the day. On BSE, 1391 shares rose as compared with 889 that advanced. 89 shares remained unchanged.

The BSE Realty index (up 3.94%), the Bankex (up 1.20%), BSE Oil & Gas index (up 2.34%), BSE Consumer Durables index (up 2.93%), outperformed the Sensex.

The BSE Auto index (down 0.01%), the BSE Metal index (up 0.23%), the BSE Teck index (down 1.70%), the BSE IT index (down 2.88%), the BSE HealthCare index (down 0.32%), the BSE Capital Goods index (up 0.25%), the BSE Power index (up 0.14%), the BSE FMCG index (up 0.05%), and the BSE PSU index (down 0.05%), underperformed the Sensex.

Among the 30-member Sensex pack, 20 declined while the rest gained. Tata Motors (down 3.39% to Rs 155.10), Bharti Airtel (down 1.93% to Rs 728), and HindustanUnilever (down 1.43% to Rs 238), edged lower from the Sensex pack.

HDFC (up 2.59% to Rs 1648.95), Hindalco (up 3.70% to Rs 53.20), and Jaiprakash Associates (up 1.99% to Rs 84.40), edged higher from the Sensex pack

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) jumped 4% to Rs 1313.20, recovering sharply from day's low of 1212.60. On Thursday, 11 December 2008, the government withdrew an affidavit filed in the Bombay High Court wherein it had asserted that RIL cannot sell its Krishna-Godavari basin gas to anyone without its approval to the pricing formula. In its affidavit filed last month, the government had also said that RIL could not sell KG basin gas at a price less than $4.20 per million British Thermal Units.

The withdrawal came following insistence by Anil Dhirubhai Ambani Group (ADAG) firm Reliance Natural Resources (RNRL)'s counsel Ram Jethmalani to cross-examine the government on the issue. RNRL rose 0.65% to Rs 55.10. While the government approved price of gas for KG basin is $4.20 per million British Thermal Units (mBTU), RNRL is seeking the gas at $2.34 mBTU.

Other Anil Dhirubhai Ambani Group (ADAG) firms - Reliance Infrastructure (up 6.53% to Rs 644), and Reliance Communications (up 4.06% to Rs 248.90) rose.

Banking shares moved in positive zone from negative zone in late trade on hopes of further interest rate cuts to shield the weakening economy from a global recession after industrial production fell for the first time in 15 years.

India's top private sector bank by net profit ICICI Bank rose 1.19% to Rs 411.10, after touching a low of Rs 382. State Bank of India (up 0.74% to Rs 1207, off day's low of Rs 1142.60), and HDFC Bank (up 0.29% to Rs 920, off day's low of Rs 880), gained.

The Reserve Bank of India (RBI) on 6 December 2008, announced a 100-basis point cut in the repo rate and the reverse repo rate each. Repo rate is the rate at which RBI lends to commercial banks and reverse repo rate is the rate at which RBI accepts deposits from banks.

Real estate shares cut early losses on hopes housing demand will improve in a soft interest rate regime. India's top real estate developer by market capitalisation DLF jumped 7.15% to Rs 275, recovering from the session's low of Rs 236.90. It was the top gainer from the Sensex pack.

Unitech (down 0.72% to Rs 34.40, off day's low of Rs 31.20), Indiabulls Real Estate (down 2.26% to Rs 125.70, off day's low of Rs 118.25), and Akruti City (down 1.69% to Rs 642, off day's low of Rs 638), though in the red, cut intraday losses.

As per reports, home loan interest rates are set to be cheaper as public sector banks are planning to cut rates on small-ticket home loans by up to 300 basis points.

India's second largest private sector power generation firm by sales Tata Power rose 3.28% to Rs 755, off day's low of Rs 700. Reportedly Tata Sons is unlikely to convert over 10 million preferential warrants issued by the company 18 months ago, into equity shares, as the company's stock is currently trading around 45% lower than the conversion rate.

Auto shares rebounded from early slump triggered by weak sentiment for the sector after a proposal to bail out the US auto industry failed in a procedural vote in the Senate. India's top tractor maker by sales Mahindra & Mahindra rose 1.29% to Rs 290, rebounding sharply from day's low of Rs 262. The early fall came after the company's farm equipment unit announced a cut in production, due to slackening demand. The company announced the production cut after trading hours on Thursday, 11 December 2008.

India's biggest small car maker by sales Maruti Suzuki India recovered from low of Rs 465.60 and settled 0.35% higher at Rs 512

Down 3.39% Rs 155.10, Tata Motors, India's top truck maker by sales Tata Motors, recovered from an intraday low of Rs 147.

Auto parts maker Bosch fell 2.71% to Rs 3052.05 after the firm said it has decided to declare a lockout at its plant in Jaipur due to a strike by workers. The company announced this after trading hours on Thursday, 11 December 2008.

Outsourcing focused IT pivotals were the chief casualty for the second straight day as fears that a weak global economy would cut the amount firms spent on technology offset a weaker rupee. India's largest IT exporter by sales Tata Consultancy Services lost 4.70% to Rs 483.80 and was the top loser from the Sensex pack.

India's second largest IT exporter by sales Infosys slipped 2.64% to Rs 1106. India's third largest IT exporter by sales Satyam Computer Services slipped 0.95% to Rs 222.25. India's fourth largest IT exporter by sales Wipro shed 3.48% to Rs 241.30

The rupee was weaker at 48.60/62 per dollar, compared to Thursday's close of 48.33/34, following a decline in Asian stock markets. A weak rupee benefits IT firms as they earn most of the revenues in dollar terms.

Metal stocks declined as the news of the failed bailout of the US auto sector knocked metal and oil prices in the commodities markets. India's top copper producer by sales Sterlite Industries (India) slipped 2.48% to Rs 287.80 on profit booking after advancing 8.43% on Thursday, 11 December 2008. Its American depository receipt (ADR) rose 3.92% on Thursday, 11 December 2008.

Tata Steel (down 0.07% to Rs 217.70), Sesa Goa (down 2.23% to Rs 78.75), Nalco (down 8.31% to Rs 179.75), and JSW Steel (down 6.49% to Rs 223.75), slipped.

India's largest oil exploration firm by market capitalisation Oil and Natural Gas Corporation (ONGC) was down 3.02% to Rs 644.70 as oil prices fell. US crude prices fell by nearly $2 to $46.11 a barrel.

Reliance Industries was the top traded counter on BSE with turnover of Rs 499.35 crore followed by Reliance Natural Resources (Rs 300.30 crore), Reliance Capital (Rs 299.50 crore), DLF (Rs 207 crore) and Reliance Infrastructure (Rs 185.50 crore).

Reliance Natural Resources led the volumes chart on BSE clocking volumes of 5.37 crore shares followed by IFCI (1.87 crore shares), Suzlon (1.75 crore shares), Unitech (1.50 crore shares) and Reliance Petroleum (1.41 crore shares).

State-run oil marketing firms advanced on reports the government is considering a proposal to de-regulate the pricing of petrol and diesel.

HPCL (up 6.67% to Rs 239), BPCL (up 8.79% to Rs 352.55), and IOC (up 2.44% to Rs 386.20), gained.

The proposed deregulation of fuel prices, will provide full freedom to oil companies to set petrol and diesel prices.

Fertliser shares rallied on recent reports of government giving bonds worth Rs 10,000 crore to 23 fertiliser companies.

Deepak Fertiliser (up 4.94%), Nagarjuna Fertiliser (up 5.26%), Chambal Fertiliser & Chemicals (up 3.84%), RCF (up 2.80%), and Coramandel Fertiliser (up 2.64%), surged.

Reportedly the government on 11 December 2008 issued special bonds worth Rs 10,000 crore of coupon rate 7% to 23 fertiliser companies as compensation for subsidising prices in the current financial year.

Tulip Telecom galloped 17% to Rs 507 after a bulk deal of 4 lakh shares was struck on the counter at Rs 433.95 at 10:02 IST on BSE

Nitin Fire Protection Industries galloped 18.02% to Rs 196.80 after it bagged an order worth Rs 2.3 crore. The company announced the order win during trading hours today, 12 December 2008.

Ruchi Soya Industries surged 5.15% to Rs 25.50 after a block deal of 41.60 lakh shares was executed on BSE at Rs 23.30 per share. The block deal constituted 2.13% of the company's equity.

Daily Call - Dec 12 2008

The markets are likely to edge lower in the morning trade as some profit taking could creep-in as the package for the US Auto companies is still hanging fire in the Senate. The slide in the Dollar, however, will keep the embers hot for the commodities, though the related stocks may see some profit booking. But keep an eye on news channels, for that Auto package, which may be passed later today.



The markets are likely to watch with keen interest the reading of the Index of Industrial Production (IIP), which should come around 12 noon. The street expects a reading of 2% growth for the month of October. A lower growth would be disappointing. But going by the fact that the markets are showing very strong resilience, there could be a scenario, in which the markets may initially fall and then bounce back with a vengeance. In case of such an eventuality, it will mean that this rally has legs. But do not take that risk without stop losses. Things do not change materially unless we see a close below 2750.

Pre Session Commentary - Dec 12 2008

oday we expect the market to open with a negative gap as US markets have closed in red and other Asian markets opened with heavy blood bath. The IIP numbers to be announced today will also play an important role in the markets sentiments. Amidst the insecure feeling and cautious approach one would witness some early losses in the day’s trade. The feelings across the globe are bearish and hence investors would have to be very cautious in their holdings.

On Thursday, the markets moved highly volatile however later managed to end flat. The sentiments were not as strong as in the previous day and later during the trading session it collapsed by nearly 200 points. Asian markets were also trading volatile coupled with the European markets, which ended in red. Towards the end the good inflation numbers helped the markets pare off its losses and managed to close flat. Sensex and Nifty gained by 5.37% and 5.18%. Realty, Oil & Gas and Metal gained 2.12%, 1.67% and 1.37% respectively. During the trading session we expect the market to be trading volatile.

The BSE Sensex closed marginally lower by 9.44 points at 9,645.46 and NSE Nifty ended slightly down by 8.10 points at 2,920.15. The BSE Mid Caps and Small Caps ended with gains of 54.84 points and 48.14 points at 3,003.08 and 3,443.59 respectively. The BSE Sensex touched intraday high of 9,746.01 and intraday low of 9,441.97.

Inflation for the week ended 29th November 2008, stood at 8% as compared to 8.4% of the previous week. It was 3.89% during the corresponding week last year. Inflation rate for primary articles, which has a weight of 22% in the index number, fell to 11.66% in the reported week as compared to 11.98% in the previous week.

On Thursday, the US markets closed negative as the macro economic data pulled the sentiments. The U.S. House of Representatives approved yesterday a $14 billion plan to aid Ford, General Motors, and Chrysler, but the plan is encountering resistance in the Senate. On the other hand October trade deficit climbed to $57.2 billion from $56.6 billion as the exports dropped significantly. Initial jobless claims for the week ended December 6 increased 58,000 to 573,000. Continuing claims increased to 4.43 million from 4.09 million. Crude oil futures for the month of January delivery grew $4.46 to $47.98 per barrel on New York Mercantile Exchange. The crude futures soared on the back of sharp weakness in the dollar and expectations that the Organization of Petroleum Exporting Countries will deliver a significant production cut next week.

The Dow Jones Industrial Average (DJIA) closed lower with 196.33 points at 8,565.09 NASDAQ index lost 57.60 points at 1,507.88 and the S&P 500 (SPX) also closed lower by 25.65 points to close at 873.59 points.

Indian ADRs ended mixed. In technology sector, Infosys lost by 4.35% and Wipro ended low by 3.24% followed by Satyam that gained 0.0.08% and Patni Computers closing low by 3.93%. In banking sector ICICI Bank lost 0.71%, while HDFC Bank gained by 1.68%. In telecommunication sector, Tata Communication inclined by 0.66%, while MTNL inclined by 1.28%.

Today the major stock markets in Asia opened with heavy blood bath. The Shanghai Composite is trading low by 39.04 at 1,992.64 Hang Seng is low by 803.88 points at 14,810.02. Further Japan''s Nikkei is low by 110.37 points at 8,610.18. South Korea’s Seoul Composite is low by 31.25 points at 1,123.18 and Singapore’s Strait Times is low by 62.12 points at 1,732.04.

The FIIs on Thursday stood as net buyer in equity and net seller in debt. Gross equity purchased stood at Rs 2603.20 Crore and gross debt purchased stood at Rs 102.40 Crore, while the gross equity sold stood at Rs 1614.80 Crore and gross debt sold stood at Rs 555.40 Crore. Therefore, the net investment of equity and debt reported were Rs 988.40 Crore and Rs (453.00) Crore respectively.

On Thursday, the partially convertible rupee ended at 48.33/34 per dollar as against 48.25 on Friday last week. The rupee ended stronger by 1.4% as there was unwinding of long dollar positions in the non-deliverable markets, which prompted banks to sell dollars in the spot market.

On BSE, total number of shares traded was Rs 38.58 Crore and total turnover stood at Rs 4,638.42 Crore. On NSE, total volume of shares traded was Rs 84.74 Crore and total turnover was Rs 12,074.93 Crore.

Top traded volumes on NSE Nifty – Unitech with 69099536 shares, Suzlon Energy with total volume traded 57853064 shares, followed by Reliance Petro with 25300006 shares, DLF with 22908063 shares and SAIL with 18876949 shares.

On NSE Future and Options, total number of contracts traded in index futures was 942024 with a total turnover of Rs 12,693.06 Crore. Along with this total number of contracts traded in stock futures were 1107143 with a total turnover of Rs 10,989.57 Crore. Total numbers of contracts for index options were 949555 with a total turnover of Rs 14,057.38 Crore and total numbers of contracts for stock options were 81593 and notional turnover was Rs 866.16 Crore.

Today, Nifty would have a support at 2,795 and resistance at 2,905 and BSE Sensex has support at 9,180 and resistance at 9,580.

Auto sector pulls US Markets down

Uncertainty over bailout plan of auto sector unnerves investors

Disappointment over the auto bailout plan swept over Wall Street since the very start of the day on Thursday, 11 December, 2008. Though there was some optimistic earning reports, market ignored them and concentrated more on the negative economic reports. The energy sector tried to support the Dow with crude up by more than 10% today on hopes of production cuts by OPEC. The Dow flirted in the positive territory for a brief period, it soon slipped back in the red. Losses increased in the last hour of trading.

On Wall Street, the Dow Jones industrial average closed down 196 points at 8,565, the Nasdaq closed down by 57 points at 1,507 and the S&P 500 moved down 25 points at 873.

Nine out of ten sectors ended in the red today led by the financial sector. Financials continued to be a major laggard today. GM led the pack of Dow laggards down by 11%, closely followed by Bank of America, Citigroup and JP Morgan Chase.

As per the latest developments in the auto deal workout, late Wednesday, the House of Representatives approved a $14 billion federal loan package to the Big Three automakers in a 237-170 vote. However, the plan is expected to encounter resistance from the Senate.

Among major economic reports hitting the wires today, the Labor Department reported today that that the number of first-time filings for state unemployment benefits jumped by 58,000 to a 26-year high of 573,000. The number of people collecting unemployment benefits rose by 338,000 to stand at 4.43 million, also the highest since late 1982. The increase in continuing claims in the week ended 29 November was the most since 1974.

Initial claims represent job destruction, while the level of continuing claims indicates how hard or easy it is for displaced workers to find new jobs.

The jobless claims report shows businesses are laying off workers at a rapid pace, and finding employment is ever harder for those who've lost their jobs. Compared with the same week a year ago, new jobless claims are up about 59%, while continuing claims are up 58%. In November, 533,000 nonfarm payroll jobs were lost, the most for a single month since 1974. The economy has shed 1.9 million jobs since the recession began in December 2007.

In a separate report, The US Department of Commerce, announced today that the October trade deficit climbed to $57.2 billion from $56.6 billion, which was unexpected. According to the data, exports dropped significantly and have been down three straight months. This is due to weak overseas demand and the strengthening dollar. Total October exports of $151.7 billion and imports of $208.9 billion resulted in a goods and services deficit of $57.2 billion, up from $56.6 billion in September, revised.

On the earnings front, wholesaler Costco topped earnings per share expectations for the latest quarter. Dow component Procter & Gamble confirmed its second quarter and fiscal 2009 outlook earlier today. Eli Lilly reaffirmed its outlook for fiscal 2008, and issued upside guidance for fiscal 2009. Despite these positive news, market failed to gather any sort of momentum.

October exports were $3.4 billion less than September exports of $155.1 billion. October imports were $2.7 billion less than September imports of $211.6 billion.

Crude prices shot up drastically today. This was the second consecutive rise for crude prices. Prices rose today due to the weak dollar and the on anticipation that OPEC will go for a drastic production cut in its next meeting scheduled next week.

On Thursday, crude-oil futures for light sweet crude for January delivery closed at $47.98/barrel (higher by $4.46 or 10.2%) on the New York Mercantile Exchange. Earlier in the day, prices touched a high of $49.12. For this year in 2008, crude prices have dropped 40%.

Trading volumes showed 1.4 billion shares exchanging hands on the New York Stock Exchange and 812 million trading on the Nasdaq stock market. Declining issues topped gainers by 3 to 1 on both the NYSE and on Nasdaq.

Tomorrow's economic reports include Producer Price Index, Retail Sales data, Business Inventories and Preliminary University of Michigan Consumer Sentiment.

Weak global cues may trigger lower start; IIP data eyed

Key benchmark indices are likely to see nervous start amid weak global cues. The Nifty futures traded as SGX CNX Nifty Index Futures in Singapore were down 80 points. The index of industrial production data for October 2008 scheduled to be announced later during the day will be closely watched.

As per reports, industrial production is expected to grow marginally or register a dip for the first time since 1994, on slowing demand and deepening recessions in major economies. The index had expanded 12.2% in October 2007.

Meanwhile, the Securities and Exchange Board of India's (Sebi) Mutual Fund Advisory Committee (MFAC) will meet today, 12 December 2008 to discuss key issues on the agenda, including further tightening of asset liability norms and valuation of non-traded debt. The meeting will also review limits on exposure to individual securities and whether there should be limits on exposure to pass-through certificates. Another related issue on the agenda of the committee is the valuation of non-traded debt securities. The most-debated issue of hiking the net worth requirement for an asset management company is also likely to be finally addressed.

Asian markets were trading weak today, 12 December 2008, on worries over the fate of the US auto industry bailout plan and a retreat in global banking shares while lower oil prices pressured commodity counters. China's Shanghai Composite plunged 1.94% or 39.37 points at 1,992.31, Hong Kong's Hang Seng slipped 2.41% or 375.87 points at 15,238.03, Japan's Nikkei was down 1.27% or 110.37 points at 8,610.18, Singapore's Straits Times declined 1.28% or 22.99 points at 1,771.17, South Korea's Seoul Composite fell 0.58% or 6.73 points at 1,147.70 and Taiwan's Taiwan Weighted was down 0.50% or 23.44 points at 4,632.13.

US markets closed on Thursday, 11 December 2008 on bleak prospects for a federal bailout of Detroit's Big Three automakers, while bleak comments about the banking sector from JPMorgan's chief executive hit financial shares.

The Dow Jones plunged 196.33 points, or 2.24%, to 8,565.09. The S&P 500 index declined 25.65 points, or 2.85%, to 873.59, and the Nasdaq Composite index fell 57.60 points, or 3.68%, to 1,507.88.

Closer home, hopes that the central bank may cut rates further and reports that the government is likely to come out with a second fiscal stimulus for the economy helped the market rebound in the last one hour of trade on Thursday, 11 December 2008. The BSE 30-share Sensex slipped 9.44 points or 0.10% to 9,645.46 and the S&P CNX Nifty fell 8.10 points at 2,920.15 on that day.

Foreign institutional investors (FIIs) were net buyers worth Rs 444.18 crore while mutual funds sold shares worth Rs 15.37 crore on Thursday, 11 December 2008, according to provisional data on NSE.